THIS SPRING, A MASSIVELY oversize duchesse satin floral opera coat won over a fatigued crowd at French fashion label Rochas's fall/winter 2013 runway presentation with its exaggerated humor. Two days later, it became street-style photography bait when stylist Giovanna Battaglia sashayed into the Dior show wearing it. Any fashion fan longing to copy her style could satisfy the itch in one place: the fashion retail website Moda Operandi, where, for a limited period following the show, the coat was being offered for $12,075.

Such purchases were once reserved for hushed boutiques and the upper reaches of department stores, but today, buying a $595 pair of Valentino studded ballerina flats or a $1,510 Peter Pilotto skirt online is fashion's newest frontier. While the reliably robust luxury market is projected to grow 10 percent in 2014, the same market online is slated for a 25-percent growth rate, according to business consulting firm Bain & Company, just one reason why more and more high-end retailers are launching on the Internet. But unlike other premier shopping sites, like Net-a-Porter—an Internet version of Bergdorf Goodman—or discount flash-sale sites, like Gilt Groupe, Moda Operandi is based primarily on the concept of the trunk show, which allows customers to place advance orders for next season's wardrobe. The orders are commissions, helping to secure the production of the clothes presented. The founders of Moda (as it's known), Gilt alum Áslaug Magnúsdóttir, 45, and Vogue contributing editor Lauren Santo Domingo, 36, believed there was a global clientele who would jump at the chance to buy straight off the runway—even if it was at an often staggering retail price—months before the product would be shipped. "I had always heard stories of the annual Oscar de la Renta trunk show that would do millions of dollars in a day," Santo Domingo says.

For serious shoppers—which Moda clients are, averaging $1,500 per transaction, with a record single order clocking in at $90,000—the guarantee of getting their hands on an Anndra Neen cage clutch, Kenzo jacket or Giambattista Valli cocktail dress matters. "Our average customer is similar to me," says Santo Domingo. "She's educated, lives in an urban center, 36 years old, travels internationally, loves fashion and culture, speaks multiple languages and has multiple addresses." The Moda client is also a plugged-in fashion fan, likely to watch the live stream of the Marc Jacobs show, read the review on style.com and await Moda's email about the trunk show to ensure that she'll be able to get one of the satin evening pajama tops.

Such devotion explains why Moda, though newer and smaller than many of its competitors, is starting to loom large on the retail landscape. Its position has also been helped by savvy marketing moves like signing on as the lead sponsor of the "PUNK: Chaos to Couture" exhibit, which opens this month, at the Metropolitan Museum of Art's Costume Institute. (Last year, the Costume Institute's lead sponsorship slot was filled by retail behemoth Amazon and the year before that by Alexander McQueen, part of mega-fashion group Kering, formerly known as PPR.) Over the next three months, hundreds of thousands of visitors will see the Moda logo throughout the museum, while countless others will see images online of Santo Domingo standing next to starlet Rooney Mara, Vogue editor Anna Wintour and Givenchy designer Riccardo Tisci as they cohost the Costume Institute's star-studded annual gala on May 6.

Moda investors like Tony Florence, a general partner of venture-capital firm New Enterprise Associates (NEA) and a Moda board member, see great promise—and future profit—in the trunk show model, which limits risk by passing up-front costs on to customers, who pay a 50-percent deposit for their purchases during the trunk show, with the other 50 percent paid at time of delivery. "Most of the services out there for fashion are web 1.0, meaning it's sort of a catalogue online," says Florence of competing sites. "What Moda is doing is disrupting that supply and distribution chain by connecting the designer to the customer." The company, which made its debut during February 2011's fashion week with 30 brands on board, has already seen results, making three times the sales in 2012 as compared with those in its first year of business. Such numbers surely comfort their investors, despite recent Harvard Business School research showing that 75 percent of venture capital–backed businesses won't return their investors' money.

Starting this summer, Moda will face its biggest challenge yet: It will be taking on its rivals directly by significantly expanding the in-season offerings at its online boutique, which launched in December 2012. While this means that customers who missed the Rochas coat during the trunk show might be able to find it on the site months later, during the normal fall shopping season, it also means that Moda needs to buy, store and sell a large inventory of clothing, just like a department store or Net-a-Porter. "The beauty of our initial model, and part of the reason that investors loved it so much, was there was no inventory risk and cash up front," says cofounder Magnúsdóttir.

Moda is trying to gain a competitive advantage by using the advance information they glean from trunk show sales. "We tweak our buy using that data," says Magnúsdóttir. For example, if customers already bought a particular brown Isabel Marant boot during the trunk show, Moda can plan accordingly as they stock their boutique. This puts the pressure on Moda's artistic director, Taylor Tomasi Hill, and its director of designer ready-to-wear, Indre Rockefeller, who must calibrate the orders during the frenzied selling period immediately following the runway show, while the online trunk shows take place nearly simultaneously. Decisions are often made on the spot, and there is little margin for error.

The site's best advertisements are Santo Domingo and the Moda team, who are all young and attractive, with names directly from the social register. "They've got a deep bench over there," says Bob Sauerberg, the president of Condé Nast, who oversaw the two investments that the media company made in Moda. (Part of that deal made Moda the official retail partner for vogue.com, allowing readers to purchase items from the magazine's website through the Moda preorder trunk shows.) Indre Rockefeller, 32, is a former assistant to Anna Wintour and the wife of a Rockefeller heir; the social media manager is Hayley Bloomingdale, 27, the granddaughter of retail heiress Betsy Bloomingdale; and their marketing chief, Ashley Bryan, 40, a former Net-a-Porter executive, is the daughter of Shelby Bryan (Anna Wintour's longtime boyfriend). Taylor Tomasi Hill, who prefers not to disclose her age, is a former Marie Claire style director and something of a fashion celebrity, liable to get mobbed outside shows by fans and street-style photographers. Meanwhile, Lauren Santo Domingo, a Greenwich, Connecticut, native whose wedding to the son of a Colombian billionaire received 10 pages of coverage in Vogue, has been named by the New York press as a contender for late society doyenne Brooke Astor's empty seat.

This is society 3.0. The Moda team is parlaying its individual sense of style into big business. Click on Instagram feeds for any of the women, and you'll see a cheery array of photographs from their rounds in Paris and the Middle East. You can also follow them on Pinterest, Twitter and Facebook.FB-1.26% They introduce themselves, along with the brands they carry, to potential clients at social events like luncheons. This fall, for example, the company is planning a pop-up boutique in Brazil to acquaint their growing clientele there with the London designers that Moda carries. Make a Moda purchase, and the implicit aspiration is that you're buying into an exalted fashion-forward lifestyle—a sorority of good-taste gals.

THREE AND A HALF YEARS ago Moda was just an idea percolating in Magnúsdóttir's mind. The blonde Icelander, who was then at Gilt Noir, the elite shopping section of Gilt Groupe, had realized that not all the clothing shown during fashion week was available for sale. "Designers were saying to me that they didn't have a place to sell their special pieces from the runway," she says. Retailers are often conservative when they place orders each season, since they must protect their bottom line and guarantee the highest sell-through possible. (Translation: stock their racks with "safe" options like black pencil skirts and bright cocktail dresses, not ankle-length duchesse satin coats.) In order to do so, they rely on so-called "commercial" collections—the more wearable items produced specifically to sell by brands each season—as opposed to the often more high-concept "runway" collections that showcase the designer's individual vision. Certain items that are exhibited during fashion week appear in magazines and fashion blogs but are never produced and sold. "As a customer, I would see pieces that I loved and then find out they weren't being made because no store had ordered them," says Magnúsdóttir, who came to fashion after receiving a Harvard MBA and cofounding TSM Capital, which invested in luxury brands and retailers, before moving on to Gilt. "I realized that the only way to let women buy these pieces was to put things in front of them early enough, when the designer is still in the market."

After considering the idea for several months, she asked Santo Domingo to lunch at the Flatiron café Spoon in September 2009 to propose they partner. The two met during Magnúsdóttir's TSM Capital days, when Santo Domingo was brought in to help with marketing and brand assessment. "I was immediately impressed with Lauren's great sense of style and felt that we had very complementary skill sets: mine being on the business side of fashion and hers on the creative side," says Magnúsdóttir. "I immediately thought it was a great idea," says Santo Domingo, who had been toying with the idea of launching her own brick-and-mortar boutique until the recession hit. Santo Domingo called her friend Shirley Cook, the young CEO at Proenza Schouler, to ask her opinion. "When we spoke about her idea for online trunk shows, it made complete sense," says Cook, 33. "Lauren understands the customer, their way of life, their taste level and their needs. Her genius point was that not everyone who wants runway fashion attends fashion shows. Moda Operandi allows you to shop with every privilege industry insiders are afforded."

By the summer of 2010, the pair had started to work in earnest on Moda, which was initially simply called The Trunk Show. They raised initial seed money from family and friends—just enough to rent office space. In August of that same year, their first venture round closed after raising $1.5 million—allowing them to hire a chief technology officer and a tech agency. The only problem left was convincing designers to sign on. Like any of the big retail stores, the cofounders knew Moda would live and die by the caliber of brands they carried. "We didn't have anything to show the fashion brands; it was just us talking," says Magnúsdóttir, laughing. "They kept asking, 'Do you have mockups of the site?' And we were like, 'Not really.' "

Thirty brands signed up. An Alexander Wang trunk show was the first offering, at 1 p.m. on February 16, 2011: Santo Domingo placed the first order, for a rose satin slip dress, and Magnúsdóttir the second, for a poncho sweater. Then they sat back and waited.

Now, $20,000 gowns sell regularly on Moda, largely to their Middle Eastern customers, who represent a fifth of their total business. And thus far, it has attracted $48 million in financing, including a $36 million investment round in June 2012. NEA, which is also a backer of Gilt Groupe, is their largest institutional investor, and LVMH, Condé Nast and IMG are all strategic partners. Moda now has over 300 brands on board for their trunk shows and 70 in their in-season boutique, including big draws like Isabel Marant, Valentino, Rodarte and Giambattista Valli. (The fashion houses that have their own large e-commerce efforts, like Ralph Lauren or Louis Vuitton, do not participate, nor do labels such as Chanel and Céline, which refuse to participate in e-commerce altogether.) They have customers in 70 countries, with New York being the number-one market—where they recently launched same-day delivery for items from their in-season boutique, just like Net-a-Porter does.

As Moda heads full steam into their competitor's waters, it remains to be seen how the site's unique position, which until now has been based on a particular alchemy of taste, personal friendships and fashion savvy, will be maintained. Will broadening their in-season offerings in their boutique allow a wider audience to benefit from their long reach into the fashion world? Or will carrying a larger inventory burden the company with more risk than it can handle? They are counting on the former. Besides, says Santo Domingo, "I would never do something almost as good as someone else."

The Business of Being Moda Operandi

ENLARGE

Clockwise from top left: Moda Operandi's first ad campaign; Moda signed on as the lead sponsor of the Met's 'PUNK: Chaos to Couture' exhibition; a look from Alexander Wang's fall/winter 2011 runway presentation; Moda Operandi delivery van; a look from Valentino's Resort 2013 collection.
Firstview; Courtesy of Moda Operandi

2009

2010

AUGUST | Moda closes its first venture-capital round, raising $1.5 million. New Atlantic Ventures (NAV) is the lead investor.

2011

FEBRUARY | The site goes live with an Alexander Wang trunk show following his fall/winter 2011 runway presentation. Santo Domingo and Magnúsdóttir are the site's first customers.

JUNE | Moda raises more than $10 million in Series B financing, led by New Enterprise Associates (NEA). NAV reinvests and media company Condé Nast makes an initial investment.

2012

JUNE | Moda announces $36 million in Series C financing. Fashion behemoth LVMH and the sports and entertainment management company IMG become strategic investors. The same month, Valentino shows its first trunk show on Moda Operandi with its Resort 2013 collection.

SEPTEMBER | Moda announces sponsorship of "PUNK: Chaos to Couture" at the Metropolitan Museum of Art's Costume Institute, opening May 2013.

DECEMBER | Moda launches its in-season boutique.

2013

FEBRUARY | The company moves to a 25,000-square-foot Tribeca office space with two in-house photo studios and an on-site warehouse and shipping facility—offering same-day delivery in New York City.

MARCH | Moda launches its first ad campaign with model Karlie Kloss, photographed by Cedric Buchet.

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